The United Nations Global Compact: The worlds largest voluntary corporate citizenship initiative

1
The United Nations Global Compact The worlds
largest voluntary corporate citizenship initiative

• London
• November 27, 2007

2
What does CSR mean for you?

• Take a couple of minutes to write it down
• Discuss with a partner and come up with a common
  statement

3
Overview of key themes in this session
4
Why are businesses important to the United
Nations?Different purposes, overlapping
objectives
Business
Peace
Profit
Building Markets
Good Governance Security
Environment
Global Health
Poverty Reduction
Social Inclusion
Growth
Deepening Interdependencies
5
Why should business care about peace, security
and democracy?

• Open markets, steady economic development and an
  open society are the best conditions in which we
  can pursue our business. This is contrary to the
  common belief that companies find it easier to
  support the apparent stability of regimes than
  to manage the uncertainties of democracy.
  Stability built on repression is always false.
  Sooner or later the waters break the dam.
• Sir John Browne, CEO, BP

6
Of the worlds 100 largest economic entities, 51
are corporations and 49 are countries

• 22 Turkey
• 23 General Motors
• 24 Denmark
• 25 Wal-Mart
• 26 Exxon Mobil
• 27 Ford Motor
• 28 DaimlerChrysler

Sources Sales Fortune, July 31, 2000. GDP
World Bank, World Development Report 2000
7
The Global Compact
A short video
8
The Global Compact is.

• A voluntary initiative to promote sustainable
  development and good corporate citizenship
• A set of 10 principles based on universally
  negotiated international documents (UDHR, ILO
  Declaration, Rio Declaration, UN Convention
  against corruption)
• A network of companies and stakeholders
• A forum for learning and exchanging ideas

9
The Global Compact is not

• Legally binding
• A means of monitoring company behaviour and
  enforcing compliance
• A regulatory body
• A public relations channel

10
The Global Compact has two main objectives

• Make the 10 principles part of business strategy,
  operations and culture everywhere
• Promote partnerships in support of UN goals
  MDGs

11
The 10 principles are organized in 4 main areas
12
Human Rights Principles
Source www.unglobalcompact.org
13
Labour related principles
Source www.unglobalcompact.org
14
Environment principles
Source www.unglobalcompact.org
15
The anti-corruption principle was added in 2003
Source www.unglobalcompact.org
16
Using the Global Compact Why and how?
17
What are some incentives for a corporation to
join the Global Compact?
18
How can a company join the Global Compact?

• sends a letter from the Chief Executive Officer
  to the Secretary-General of the United Nations
  expressing support for the GC
• sets in motion changes to business operations so
  that the Global Compact and its principles become
  part of strategy and culture
• is expected to publicly advocate the Global
  Compact and its principles
• is expected to publish a description of the ways
  in which it is supporting the Global Compact

19
Current participation in the Global Compact

• Almost 4,000 businesses in over 100 countries
• Global, large domestic, SMEs
• All business sectors represented
• Developed and developing world (5050)
• Large number of non-business participants
• 80 country networks

20
What is the business case for the Global Compact?
(in small groups)

• 4 stations each covering 1 area of the GC
• Think through the business benefits
• Rotate to the next station at the signal
  (carousel technique)
• Debrief on each groups findings

21
Debrief from Group Activity
22
Overcoming criticism

• Your company has been a member of the Global
  Compact for 1 year but is facing some backlash
  from watchdog NGOs.how do you react?
• You represent a watchdog NGO what are some of
  your concerns around the Global Compact?

23
How can business benefit from promoting and
respecting human rights?

• Improved stakeholder relations
• Improved employee recruitment, retention, and
  motivation
• A more secure license to operate
• Increased security of investments in countries
  governed by the rule of law and respect for human
  rights
• Reduced risk of consumer action
• Reduced risk from human rights related legal
  action
• Reduced reputational risk

24
Benefits of promoting labour principles

• Increased retention of employees
• Higher productivity
• Improved reputation among consumers
• Lower training costs
• Fewer fines
• A safer workplace
• Improved relations (with government, other
  businesses, civil society)

25
How does improving environmental performance
affect business's bottom line?

• Reduced manufacturing expenses
• Reduced recruiting costs
• Increased Productivity
• Reduced water, energy, and consumables expenses
• Lower Waste Disposal Costs
• Resource and Energy Efficiency
• Reduced risk and easier financing
• Lower Environmental Fines

26
Key reasons for avoiding involvement in corrupt
practices

• Legal risks
• Reputational risks
• Financial costs
• Being 'known as clean' dissuades opportunist
  corruption
• Blackmail, and security risks
• "The one who cheats will be cheated against"
• Companies have a vested interest in sustainable
  social, economic and environmental development

27
Reporting on progress

• Our goal in writing this report has been to be
  as accurate, complete and honest as we can be
  about how Nike performs. Just producing this
  report proved to us that the value of reporting
  goes far beyond transparency. It becomes a tool
  for improving both our management of business and
  in giving us clues about what we need to do
  next.
• Phil Knight, Chairman and CEO, Nike Inc., 2004
  Sustainability Report

28
Convergence
29
The nonprofit world has been experiencing
significant changes too

• Increasing privatization of government services
  (education, health care, social services, the
  arts)
• Increasing financial pressure on nonprofits
• Increasing concerns about the efficacy of
  traditional charities
• Source Social Enterprise Private Initiatives
  for the Common Good (Harvard Business School)

30
The era of convergence is upon us

• Creating Value social and economic value
• Managing Stakeholders both are broadening their
  definition of stakeholders
• Restructuring Organizations for-profit and
  non-profit subsidiaries (e.g. Pura Vida coffee)
• Mobilizing Capital social venture capital to
  SRI

Austin J, Gutierrez R, Oliastri E, Reficco E.
Capitalizing on Convergence. SSIR (2007).
31

• The leaders of nonprofits and businesses would
  be wise to shift their current mind-set from one
  of us and them to one of we.

Austin J, Gutierrez R, Oliastri E, Reficco E.
Capitalizing on Convergence. SSIR (2007).
32
Time-permitting
33
On Complicity

• Direct Complicity
• Occurs when a company knowingly assists a state
  in violating human rights. An example of this is
  in the case where a company assists in the forced
  relocation of peoples in circumstances related to
  business activity.
• Beneficial Complicity
• Suggests that a company benefits directly from
  human rights abuses committed by someone else.
  For example, violations committed by security
  forces, such as the suppression of a peaceful
  protest against business activities or the use of
  repressive measures while guarding company
  facilities, are often cited in this context.
• Silent complicity
• Describes the way human rights advocates see the
  failure by a company to raise the question of
  systematic or continuous human rights violations
  in its interactions with the appropriate
  authorities. For example, inaction or acceptance
  by companies of systematic discrimination in
  employment law against particular groups on the
  grounds of ethnicity or gender could bring
  accusations of silent complicity.

Source Global Compact
34
Doing Good Business

• We believe that the winning companies of this
  century will be those that not only increase
  shareholder value, but increase social and
  environmental value.
• Carly Fiorina, CEO, Hewlett Packard

35
Why should a company join the Global Compact?

• Helps organize a CSR strategy
• Availability of implementation tools and guidance
• Multi-stakeholder dialogue and problem-solving
• Trust-building in societies
• 10 Principles are universal social legitimacy
• Manage globalizations new risks/opportunities

36
Socially Responsible Investments (SRI)

• Sustainable investment, also known as 'socially
  responsible investment (SRI), has grown
  enormously in the past decade. The amount of
  money invested in 'sustainable' funds has
  increased dramatically, and many of the large
  financial services firms have begun offering
  their clients a 'sustainable' option.

37
The GC Principles
Source www.unglobalcompact.org
38
Corporate Social Responsibility

• CSR refers to business practices intended to have
  a positive impact on society not just the
  companys financial bottom line.
• Source Institute for Global Ethics

39
Corporate Social Responsibility 2

• Corporate social responsibility is the continuing
  commitment by business to contribute to economic
  development while improving the quality of life
  of the workforce and their families as well as of
  the community and society at large.

Source World Business Council for Sustainable
Development
40
Some drivers moving business towards more
socially responsible practices include
Demands for greater disclosure
Customers
Growing investor pressure
Employee retention
41
Some of the benefits experienced by businesses
adopting CSR measures

• Enhanced brand image and reputation
• Increased sales and customer loyalty
• Greater productivity and quality
• More ability to attract and retain employees
• Better use of renewable resources
• Community relations
• Product safety and decreased liability

Improved Financial Performance
42
There is a growing number of players in the field
of CSR over 300 different instruments are
available

• Business Initiatives
• CERES The Coalition for Environmentally
  Responsible Economies. The 10 CERES Principles
  deal exclusively with environmental matters.
• International Chamber of Commerce The ICC
  charter sets out 16 principles for environmental
  management
• The Global Compact sets out 10 very broad
  principles
• The International Institute for Sustainable
  Development integrates environmental stewardship,
  economic development and the well-being of
  peoplenot just for today but for countless
  generations to come.
• The Global Reporting Initiative has developed
  voluntary guidelines for use by organizations for
  reporting on the economic, social, and
  environmental dimensions of their activities.

• Area of Focus

Environment
Environment
Environment Social Economic
43
The many concerns with CSR

• Businesses could just enhance their public image
  by signing up with the GC vs. actually changing
  practices (Blue washing). CSR can become
  merely a branch of PR.
• What does the Christian Aid article advocate to
  address this?